Evaluating the welfare effects of improved water quality using the choice experiment method

Abstract

This paper analyzes the welfare effects of improved health status through increased water quality using a choice experiment. The survey was administered to a random sample of households in metropolitan Cairo, Egypt. We apply a random parameter logit model in the analysis and illustrate the richness of information that can be obtained from this type of model by estimating individual level willingness to pay (WTP). We find a significant WTP for improved health status, both for short-run and long-run health effects. However, the estimated WTP is fairly low compared with the costs of a program that would achieve these improvements.